Cliff Taylor: The Brexit backstop is dead, long live the backstop

Taoiseach Leo Varadkar previously said that once an agreement was reached on how the UK would leave the EU, Ireland would be its greatest supporter in terms of negotiating a future trade deal.

This made perfect sense at the time. And Varadkar’s – tentative – support for the latest plan from London has political logic too, even if it also carries some risks.

We are no longer talking about the backstop, but rather a plan which – if Boris Johnson stays in power – may well be the way things work in future. The backstop is no more – this would be the backdrop for the future trade relationship on the island of Ireland and with the UK.

This is because Johnson, unlike his predecessor in Number 10, has clearly stated that he wants the UK to diverge from EU rules and standards. This makes the negotiations to come a very high-stakes affair.

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The original backstop plan was neat because it carved out the North and left it effectively in the EU trading bloc

So far in the talks it has been Ireland and the EU firmly on one side and the UK on the other. After Thursday’s Wirral meeting, Varadkar and Johnson indicated they felt a workable plan might be in prospect. A key question is whether the EU will sign up to it.

While the new ideas were judged by the EU to be worthy of further talking over the weekend, there is a way to go yet. The apparent acceptance by the UK side that that after Brexit there should be no customs checks on goods as they cross from the North into the Republic is a significant step.

Of course, such checks must happen somewhere – and it appears the plan involves them taking place at ports in the North, as goods enter from the UK.

Proper controls

The EU will want to be sure that this can lead to proper controls and collection of EU tariffs. And they will want to know that it will get through the House of Commons. We await the verdict of the DUP, who may have difficulties, even if the North stays formally as part of the UK customs union.

So we are heading back towards a version of the original Northern Ireland-only backstop but with some complications. The original backstop plan was neat because it carved out the North and left it effectively in the EU trading bloc, thus avoiding the need for Irish border checks.

The compromise plan will have complications and requires the EU to trust that checks will be done properly, tariffs will be collected and smuggling controlled via a system run by the UK.

The risk for the Irish Government is anything emerging that appears to put a time limit on the new arrangements

So the Taoiseach finds himself in a new position. He is giving some support to the pathway identified with Johnson – and thus putting it up to the EU to agree. It is clearly to his political advantage that they do – as it would avoid both a no-deal exit and a hard Irish border. But he will need the EU to be happy on customs and regulatory rules, too, because, Irish goods need to be accepted as Irish on Continental markets.

There can be no question from the EU side that any new customs regime would let UK goods, or goods from third countries, slip through. They won’t accept a leaky back door into the single market. And this is a much bigger issue with the UK intent on diverging from EU rules and adopting different standards and likely a low cost and low tax regime.

Compromise

For the deal to fly, Ireland will also have to pay a price – somewhere. As we wrote last week, nothing for Ireland will ever be as good as the backstop.

The compromise for Ireland here looks likely to be in the area of consent – the say given to Stormont, or even possibly the Northern Irish electorate over what happens and what regime applies in the North.

The previous backstop proposals in this area, as put forward by Theresa May at the start of 2019, would only have given the North's political representatives what might be described as consultative rights on the key bodies overseeing post-Brexit arrangements.

However, the recent Johnson plan – now ditched – appeared to offer the DUP something akin to a veto on entering regulatory alignment with the Republic.

The trick will be finding something in between these two proposals. The risk for the Irish Government is anything emerging that appears to put a time limit on the new arrangements designed to avoid border checks on the island. Dublin may have to give some ground here, compared to the original backstop plan, and the DUP may not be happy.

Future trade deal

The original negotiations were about a backstop – a guarantee which both sides hoped would not be needed, because a future trade deal between the EU and UK might be close enough to avoid border checks in Ireland, or at least make the problem easier to solve.

Now the game has changed.

Johnson’s plan is to diverge from EU rules and do new trade deals with third countries, including the US. This is why he is prepared to make concessions to make a deal now. But this means any future EU/UK trade deal is most unlikely to lead to a relationship close enough to avoid the need for customs and regulatory checks.

This means that for the EU the stakes are much higher. There will be huge fears in Paris and Berlin about a UK economy moving away from EU rules and standards and trying to get a competitive advantage.

The EU will not like this idea, will worry about the control of goods entering the UK from third countries and will want to be very sure that a leaky Irish border is not added into this mix. They may still sign up – if only to get it over with. But there is a way to go here yet.